News Corp. Publishing Business to Hold $2.6 Billion in Cash

News Corp
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on Friday released additional details about the financial position of its soon-to-be spun-off publishing company, showing the new entity will have a sizable cash position and no debt.

The new publishing company, which will retain the News Corp. name, will include titles including The Wall Street Journal and New York Post, as well as media assets in England and Australia and the book publisher HarperCollins. The company will be separated from News Corp.'s larger entertainment businesses, which will be renamed Fox Group.

The new publishing company is expected to have a cash balance of about $2.6 billion after its spinoff, of which most will be held domestically, according to News Corp.'s recent filing with the Securities and Exchange Commission. As expected, the company will be spun off with no debt on its balance sheet.

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In the filing, the new News Corp. also acknowledged certain risks in its business. As for the continuing fallout from the phone-hacking scandal in the U.K., the new company said the parent will indemnify it for payments made after the distribution date arising out of civil claims and investigations relating to the U.K. Newspaper Matters, among other costs.

"However, violations of law may result in criminal fines or penalties for which we will not be indemnified," the company said.

Other acknowledged risks include problems with the newspaper industry in general; no assurance that its education division, Amplify, will become profitable; and "the need to respond to changes in consumer behavior as a result of new technologies in order to remain competitive."

For the six months ended Dec. 31, the publishing company on a pro forma basis posted a profit of $1.31 billion and revenue of $4.45 billion.

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